Analysis of US EIA data: Product stocks drop due to abnormally low imports
New York - November 17, 2010
US product stocks fell another 1.845 million barrels to 748.807 million barrels the week ending November 12 as abnormally low levels of imports eroded inventories, an analysis of the oil data released Wednesday by the Energy Information Administration (EIA) showed. This analysis and commentary is provided by Linda Rafield, Platts senior oil analyst and editor of the weekly Futures and Derivatives Review, a supplement to Platts Oilgram Price Report.
At 748.807 million barrels, product stocks were 40.2 million barrels above the five-year average and 493,000 barrels below year-ago levels.
Gasoline imports dropped 240,000 barrels per day (b/d) to 562,000 b/d, the lowest level since February 2004, and indicative of the re-balancing of Atlantic Basin stocks that occurred as a result of the port and refinery strikes in France. The decline in gasoline imports helped stocks to draw 2.657 million barrels to 207.679 million barrels.
Gasoline inventories were 6.687 million barrels above the five-year average, but 1.403 million barrels below year-ago levels.
In the past four weeks, gasoline stocks have cumulatively declined 11.65 million barrels. The largest decline in gasoline inventories during the week of November 12 occurred in the Midwest where stocks fell 1.99 million barrels to 49.03 million barrels as a result of lower output by refiners.
Imports of middle distillates declined 93,000 b/d to 87,000 b/d, the lowest level since April 2000 and contributing to a drop in stocks of 1.11 million barrels to 158.792 million barrels. Distillate inventories were 22.297 million barrels above the five-year average, but 8.605 million barrels below year-ago levels. The entire draw in middle distillates was concentrated in ultra low sulfur diesel. Heating oil stocks actually increased 599,000 barrels to 51.578 million barrels as abnormally warm temperatures dampened demand.
The erosion of product inventories occurred despite a pullback in demand readings week-over-week.
U.S. oil demand dropped 739,000 b/d to 18.86 million b/d with a 66,000 b/d decline in exports to 2.087 million b/d contributing to the decrease.
Distillate demand fell 615,000 b/d to 3.78 million b/d week-over-week, but on a four-week moving average at 4.086 million b/d was 498,000 b/d above year-ago levels, a number that is likely skewed by exports. Gasoline demand fell 104,000 b/d to 8.952 million b/d week-over-week, and at 9.095 million b/d on a four-week moving average was 162,000 b/d above year-ago levels.
Not only did product imports decline, but imports of crude did as well.
Crude imports declined 225,000 b/d to 7.864 million b/d, an 11-month low. But the last time imports were this low was December when tankers typically sit out at sea due to end-of-year tax considerations and causing a sharp drop-off in import levels.
The result of such low crude imports was a 7.286 million barrel draw in inventories. But crude stocks were still 32.231 million barrels above the five-year average and 20.807 million barrels above year-ago levels.
The bulk of the draw in crude stocks occurred on the Gulf Coast, where inventories fell 6.805 million barrels to 183.486 million barrels despite an increase in imports in that region. Crude imports to the Gulf Coast climbed 149,000 b/d to 4.951 million b/d, but were offset by an increase in refinery inputs of 180,000 b/d to 7.626 million b/d.
While U.S. crude stocks dropped significantly, inventories at Cushing, Oklahoma – home of the New York Mercantile Exchange (NYMEX) crude oil futures contracts delivery point – rose 1.266 million barrels to 33.065 million barrels, the first increase in inventories in that region in six weeks.
*Editor’s Note: Linda Rafield’s commentary is based on her knowledge of market trends, information from industry sources, and her own views as a long-time energy analyst. Please contact Kathleen Tanzy if you require any additional information or would like to interview Linda Rafield.
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